Thursday, Mar 28 2024 | Time 18:07 Hrs(IST)
image
Business Economy


RBI likely to cut repo rate by 25 bps: ICRA

Mumbai, Dec 5 (UNI) Rating agency ICRA expects a 25 bps reduction in the repo rate to be announced on Wednesday followed by one more cut of a similar magnitude up to June 2017.
Moreover, the Reserve Bank of India (RBI) is likely to outline measures to manage the systemic liquidity, which would be of interest to the banks, and provide some timeframe by which cash liquidity would increase, that would be of significance to the public.
Naresh Takkar, MD and Group CEO, ICRA, said ''There is a high likelihood of a 25 bps cut in the repo rate in the upcoming policy review in December 2016, which would support sentiment amidst the temporary slowdown in economic activity.
A rate cut and clarity on liquidity management would provide a strong signal to the banks to lower deposit and lending rates.''
''Fiscal measures may have a limited impact on stimulating demand in the short term. However, the moderation in demand would dampen CPI inflation, allowing for further monetary easing of 50 bps up to
June 2017.
Additionally, infusion of cash would lubricate the economy, boosting sentiment and reviving consumption faster than fiscal or monetary stimulus measures,'' he added.
The crunch in cash liquidity has weakened consumer confidence, which is likely to dampen domestic consumption growth and corporate earnings in Q3 FY2017. On the upside, however, curtailed economic
activity would dampen inflation, particularly for big-ticket and discretionary items.
Retail inflation is likely to modestly undershoot the RBI’s March 2017 target of 5.0 percent, allowing for further monetary easing of 50 bps up to June 2017, in ICRA’s view.
Banks may be cautious in lowering lending rates until greater clarity emerges on how the RBI would manage liquidity. The ceiling for the MSS has now been hiked to Rs Rs 6 lakh crore.
This in conjunction with the stock of government securities in excess of Rs 7 lakh crore held by the RBI, suggests that the central bank may no longer need the CRR hike to absorb excess liquidity.
Therefore, ICRA expects the temporary CRR hike to be reversed in the upcoming policy review with effect from the next reporting Friday, along with the announcement of issuance of securities under the MSS, to absorb the excess liquidity.
UNI JS NV PBP1600
More News
Luminous enters solar panel mfg; 250 MW facility launched with initial investment of Rs 120 cr

Luminous enters solar panel mfg; 250 MW facility launched with initial investment of Rs 120 cr

28 Mar 2024 | 5:16 PM

Rudrapur, Mar 28 (UNI) From power Back-up solutions to Batteries and Solar applications, Luminous Power Technologies on Thursday announced the launch of its state-of-the-art solar panel manufacturing facility here.

see more..

Kottayam-Kochi Rubber Market rates

28 Mar 2024 | 5:04 PM

Kottayam, Mar 28 (UNI) Following were the Rubber Market rates announced by the Rubber Board here on Thursday per quintal.

see more..
Indian Oil dispatches its first packed LPG truck load from Sitarganj bottling unit

Indian Oil dispatches its first packed LPG truck load from Sitarganj bottling unit

28 Mar 2024 | 2:37 PM

New Delhi, Mar 28 (UNI) State-owned Indian Oil on Thursday rolled out the first truckload of packed LPG from the Indane bottling plant at Sitarganj in Uttarakhand.

see more..

GOCL signs MoU with Squarespace Builders

28 Mar 2024 | 12:00 AM

Hyderabad, Mar 27 (UNI) GOCL Corporation Limited (GOCL), a Hinduja Group company, on Wednesday said it has entered into a significant memorandum of understanding (MoU) with Squarespace Builders Private Limited, situated in Hyderabad, to initiate the strategic monetisation of around 264.50 acres of prime land located in Kukatpally.

see more..

CSIR-NIIST develops tech for biomedical waste disposal

27 Mar 2024 | 7:57 PM

Thiruvananthapuram, Mar 27 (UNI) In a first in the country, the CSIR-National Institute for Interdisciplinary Science and Technology (CSIR-NIIST) has developed an innovative technology for safe, sustainable and cost-effective management of biomedical waste.

see more..
image